Corporate governance

a. If Sports Experts expands into Thailand, do you think its cost of capital will be greater or lower than its cost of capital when operating solely in the US? Explain your answer. Sports Experts’ cost of capital will probably be greater than the cost of capital of sport shoes manufacturers operating in the U.S. because of Sports Experts’ expansion into Thailand. Typically, an MNC has access to international capital markets, and international diversification are advantageous to an MNC’s cost…

From the time of their first job to the time of death, each and every American Citizen pays income taxes. To fully understand taxation, a citizen must look into the past, the present, and the future of taxes. The past, the present, and the future situations of taxes can be analyzed to determine the purpose of the taxation system in the American society. What is the past, the present, and the future of taxes in America? In the past taxes have been a touchy subject. Taxes in the early colonies…

The company will have many kinds of stakeholder which include internal and external stakeholders. The stakeholders are people who interest or stake in an organization and their opinion can affect the organization. The main stakeholders incorporate shareholders, creditors, employees and the community. There are advantage and disadvantage for stakeholder when dealing with or using a limited liability company (LLC) structure for small businesses in New Zealand. In a limited liability company,…

QUESTION 1: VALUATION OF SHARES 1. ROE= 25% Dividends Paid = DPS/EPS (54000/50000)/4.32 1.08/4.32 0.25 25% Share price for Ragan is $27.36 2. Growth for 5years = 18.75% Growth after 5 years = 15% Dividends D(0)=1.08 D(1)=1.08 X 1.1875=1.2825 D(2)=1.2825 X 1.1875=1.52296 D(3)=1.52296 X 1.1875=1.8085 D(4)=1.8085 X 1.1875=2.1476 D(5)=2.1476 X 1.1875=2.5503 D(6)=2.5503 X 1.15=2.9328 Terminal Value = 2.9328/0.15 X 0.20 = $41.4 Share Price = D1/(1+r) + D2(1+r)^2 +D3(1+r)^3 +…

Operational Efficiency (Appendices 3) The management activities of operating asset are the most importance factors in the field of profit and loss. The main business activities in the management of asset are total inventory and asset management and so on. Inventory is very important, because it is the fastest flow of assets into cash in a normal business process, and fundamentally affects the cash flow Inventory turnover measures the conversion speed between inventory and sales and is defined by…

Management of Working Capital Case Study: “George’s Trains” Based on the video, George is running a very profitable business. Yet, George is conscious and knows that one is in a MBA Managerial Finance class. George feels that one is able to address and give contributable guidance on his working capital practices. George approaches you with a few questions related on how to advance on his working capital practices. For example, what are the potential dangers in Capital Budging practices,…

(k) for the firm remains constant. Thus, Gordon’s model also ignores the effect of a change in the firm’s risk-class and its effect on the discount rate (k). • The firm and its stream of earnings is constant and doesn’t change . • There is no corporate tax . • The retention ratio denoted by (b) once decided upon remains constant. Thus, the growth rate, g = br, is constant forever. • The cost of capital is greater than the growth rate .Thus the discount rate is greater than growth rate, k…

The most popular and father of all models in asset pricing (CAPM) from Sharpe (1964) and Lintner (1965a) was developed independently of each other using the portfolio theory to deduce a market equilibrium. Portfolio theory with a riskless asset and unlimited short sales was the basis for this model (Krause, 2001). To add to the charateristics of accumulating portfolio theory to ascertain the market stability, it also considers the decision of a sole investor. Given the price Sharpe (1964) and…

QUESTION 2 2.1 Discuss the THREE key functions of money in an economy. Mohr P. and associates, (2015), indicates that money serves as an important part of our everyday life. Money is any good that is widely accepted in exchange of goods and services, as well as payment of debts. The 3 Key functions of money in an economy can be described as follows: 1. Medium of exchange can be defined as money that is used for buying and selling goods and services and if there was no money, goods would…

There are two variants of the DCF valuation: the equity valuation and the firm valuation. In fact, we can either use the free cash flow to the firm (FCFF), which is the after-tax cash flow that accrues from the firm's operations, net of investments in capital and net working capital, or we can use the free cash flow to equity (FCFE) that is the cash remaining after a firm meets all of its debt obligations and provides for necessary capital expenditure. Discounting the FCFF at the cost of capital…